Last week Facebook released third quarter results which comfortably beat expectations. In fact, this was the largest Dollar beat in their history. Revenues grew by $3.8bn to $21.2bn. Expectations were for $19.5bn. Earnings were also well ahead of expectations. They made $2.71 per share versus expectations of $1.90. This represented 28% growth form this quarter last year.
This was their best quarter ever in terms of revenue. Usually that achievement belongs to the fourth quarter which includes the festive season. The momentum should bode well for a whopper fourth quarter for the company. You can see the trend in the image below.
The stock now trades at 23 times next years earnings and cash reserves are sitting at $55bn. The company's financials are in great shape.
Monthly active users for their 3 big sites are now 2.74bn, an increase of 12% from last year. That is another important metric to follow.
Despite these great numbers the share price dropped 6% on Friday. The whole market was down, so that needs to be taken into context.
The world is digitising and Facebook is the advertising winner of that trend. Especially for smaller businesses trying to target specific clients. They also have a few side bets like online retail, gaming and smart glasses in the pipeline. The fundamentals are sound and the business is absolutely flying. This is a must own in your portfolio.